The best business loans to consolidate debt: our 2026 verdict

A business debt consolidation loan pays out several existing business debts and replaces them with a single facility. Done well, it swaps a tangle of daily and weekly debits for one repayment the business can actually carry, at a lower total cost. The best business loans to consolidate debt are longer, steadier and cheaper than what they replace. Anything else is just reshuffling.

How do businesses end up with stacked debt?

Usually one reasonable decision at a time. A short-term advance covers a quiet month. A second covers the first one’s debits during the next dip. An equipment repayment slips. A BAS goes unpaid. Within a year the business has four facilities, three repayment rhythms and no clear picture of the total.

It’s a common story under current conditions. The Reserve Bank’s October 2026 Financial Stability Review points to heightened cash flow difficulties among smaller firms, based on measures of overdue trade credit. The earlier you recognise the pattern, the more options you have.

Signs it’s time to consolidate

• You’re taking new finance mainly to meet existing repayments.
• Debits from different lenders land on different days and drain the account unevenly.
• You can’t say, without checking, how much you owe in total.
• Tax lodgements or payments are falling behind.
• A lender has offered to “top up” an advance you haven’t paid off.

Which loan is best for consolidating business debt? Our ranking

1. Our pick: a property-secured consolidation loan

If you or a director own property with equity, consolidating onto a loan secured over it usually gives the biggest relief: a longer term, one predictable repayment and a total cost well below a stack of unsecured advances. Property-secured business loans run from $20,000 to $5,000,000, through first mortgages, second mortgages or caveat loans. A second mortgage is a common route when there’s already a home loan in place. The serious trade-off: short-term business debts become a debt secured on property. Only do it with a repayment plan that clearly works.

2. Runner-up: one longer unsecured loan

Without property, a single unsecured loan with a longer term than your current facilities can still bring order and lower the weekly outgoings. Unsecured options for trading businesses typically sit between $5,000 and $500,000, sized on turnover and bank statements. Lenders will look hard at why the debts built up and whether the business can carry the new repayment.

3. An ATO payment plan, for the tax part

A tax debt doesn’t always need to be refinanced. The ATO says debts of $200,000 or less may be set up as a payment plan through its online services; larger debts need a call. A plan keeps the business engaging with the ATO, which matters for the credit reporting rules below. Our ATO debt verdict compares a plan with a loan in detail.

4. Never our pick: another short-term advance

A new short advance that pays out older ones is consolidation in name only. It usually carries similar costs, often more frequent debits, and resets the clock on the same problem. Our cash advance vs term loan verdict explains why these structures stack so easily.

How consolidation options score

Test	Property-secured loan	One longer unsecured loan	ATO payment plan (tax only)	Another short advance
Total cost in dollars	Strong: lowest for larger sums	Fair: better than a stack	Fair: interest charge keeps accruing	Weak: same costs, reset clock
Fit to the job	Strong: long enough to breathe	Fair: helps, but terms are shorter	Strong for tax debts only	Weak: short money for a long problem
Security	Weak: property now at stake	Fair: director guarantee	Strong: no security	Fair: guarantee, future takings
Flexibility	Fair: fixed terms, some redraw	Fair: fixed schedule	Fair: plan must be kept current	Weak: frequent debits
Paperwork	Weak: valuation and payout letters	Strong: statements and payouts	Strong: online for smaller debts	Strong: statements only

Our verdict

Not sure consolidation would actually save you money? Send us the list of what you owe and a specialist will tell you honestly. There’s no credit check to ask.

How does the ATO debt change the maths?

Two rule changes make tax debt more expensive to carry than it used to be:

• Interest charges are no longer deductible. The ATO confirms that GIC and SIC incurred on or after 1 July 2025 can’t be claimed as a tax deduction, and the measure is now law. The general interest charge compounds daily, and its rate is set quarterly on the ATO’s GIC rates page.
• Large overdue debts can be reported. The ATO may disclose business tax debts to credit reporting bureaus when a business has an ABN, at least $100,000 overdue by more than 90 days, and isn’t engaging with the ATO to manage it.

So a tax debt left to grow costs more after tax and can damage your credit standing. Whether to clear it with a loan or a plan comes down to comparing total dollars and the risk of reporting.

Illustrative example: four debits into one

Illustrative only; round numbers.

A café group has three short-term advances and an overdue BAS. Combined debits run to about $4,500 a week, collected on different days, plus a $40,000 tax debt accruing interest. The owner has equity in her home.

The verdict: a property-secured consolidation loan pays out the three advances and the tax debt, replacing four obligations with one monthly repayment of roughly $2,800 over a longer term. The total dollars repayable, after exit fees on the old advances, come in well below what she’d pay by running them to the end. She also moves to setting aside GST weekly so the tax debt doesn’t rebuild. Without the second step, the consolidation would only buy time.

Can you consolidate if you’re already behind?

Often, yes, but the options narrow as arrears grow. A lender looking at a consolidation wants to see that the business itself is viable and that the debts built up for a reason that’s now been dealt with: a lost contract replaced, a pricing problem fixed, a bad season over. Recent dishonours and missed payments make unsecured consolidation much harder, which is why property security does so much of the work for owners who are behind.

The worst time to start is after a lender has begun recovery action. If repayments are slipping, look at consolidation early, while your statements still show the business trading normally. Being upfront about every facility, every arrears amount and any tax debt helps the specialist find a lender who will say yes, rather than one who discovers a surprise halfway through and declines.

How to consolidate business debt, step by step

1. List every debt: lender, balance, repayment, frequency, end date and early payout terms.
2. Get written payout figures, including any exit or break fees.
3. Add up the total dollars you’d pay by running each to the end.
4. Get a consolidation quote and compare its total cost with step 3, using the total cost comparer.
5. Decide what to do with the tax debt: plan or payout.
6. Fix the cause: pricing, costs, tax set-asides or a cash flow facility for genuine gaps.
7. Close the old facilities once paid out, so they can’t be redrawn.

Our guide to consolidating business debts goes deeper on the mechanics, and our verdict on the best business loan for cash flow covers what to put in place afterwards so the stack doesn’t rebuild. Every other situation is on the 2026 verdicts hub.

Ready to turn many repayments into one?

A good consolidation lowers both the weekly pressure and the total cost. See if you qualify to consolidate with an enquiry that takes about a minute.

You won’t trigger a credit check by enquiring, and we don’t circulate your debts to a pile of lenders. One specialist looks at your full position. Please list every facility, including tax debts, honestly; a consolidation built on a partial list fails, and an accurate one can settle the first time.